Student loan delay hits 175,000 students

Almost one-in-six students have still not received Government loans or grants
following a computer failure, it has emerged.

As many as 175,000 students are waiting for payments a week after most courses started, it was revealed. Numbers increase to more than a quarter among freshers.

Documents released by the Student Loans Company (SLC) suggest the delay has been caused by a record number of applications coupled with technical problems.

Universities said they were being forced to dig into their reserves to provide loans for students struggling to pay for rent, books and food.

For the first time this year, applications for grants are being handled by the SLC instead of local authorities.

Figures released under the Freedom of Information Act show a record 1,091,653 applications for student finance were made by October 4 and 916,295 have been processed. It leaves 16 per cent outstanding.

First year students have been worst affected, with 28 per cent of the 487,179 applications outstanding.

The SLC blamed late applications and technical difficulties.

It said new scanning equipment led to a “slight delay in the processing of documents” in April and that the group then went back to “manual processing of documents”.

“The variance between the applications that have been sent in and those that have been processed is due to a combination of factors, including late applications, of which we are still receiving thousands every day,” it said. "We have now paid 750,000 students who have started their university course. This compares well to the same time last year, when we had paid 743,000 students."

The backlog follows a 17 per cent increase in the number of people applying for university funding this year. The surge has been put down to record numbers of students starting degree courses in 2009 coupled with the effects of the recession.

Critics said the SLC – which is processing grants through Student Finance England and sister organisations for Wales, Northern Ireland and Scotland – had been “caught cold”. In mid-September, officials suggested only 50,000 students were affected.

David Willetts, the Tory shadow universities secretary, said: “Ministers need to answer for this year’s chaos surrounding student loans payments. We were told three weeks ago that 50,000 students were affected but now we learn that it could be three times as many or even more.

"Tens of thousands of students could be beginning their university days in hardship because of the Government’s failure to run the system properly. The Government is ultimately in charge of the student loans system and senior officials were present at all the meetings where problems were discussed, so ministers cannot duck their responsibility for this year’s problems.”

Malcolm McVicar, vice chancellor of Central Lancashire University, said the institution had been forced to make emergency payments worth £70,000 to 250 students.

"The evidence we have is that the level of students who have not had any money is greater than in previous years,” he told the BBC. "We need an assessment of the scale of the problem. Our students are facing serious problems. Many can't find out the status of their applications. They have bills to pay. Some have families that can help but others do not.”

The SLC insisted that the number of outstanding applications included those which had been cancelled, started online but not submitted for processing, or where more information was needed. The organisation also said it was waiting to confirm the attendance of tens of thousands of students at university before releasing payments.